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Plummeting house prices and investment losses will leave millions of baby boomers dependent on Social Security in their retirement

WASHINGTON - Turmoil in the housing and stock markets now
threatens the retirement security of tens of millions of baby boomers
who looked to their houses and investments as sources of retirement
wealth. A new report
from the Center for Economic and Policy Research (CEPR) shows that due
to the collapse of the housing bubble, the vast majority of near
retirees have accumulated little or no wealth. This means that they
will be almost completely reliant on Social Security and Medicare to
support them in their retirement years.

"The collapse of the housing bubble, which led to the current
recession, has already destroyed almost $6 trillion dollars in housing
wealth for homeowners," said report co-author Dean Baker,
who will be testifying today before the Senate Special Committee on
Aging. "This reality is compounded by the recent collapse of the stock
market. The result is that many baby boomers will only have Social
Security and Medicare to rely on in their retirement.

The study, "The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble,"
analyzed the wealth holdings of families headed by people ages 45 to 54
and 55 to 64 in 2004 and projected their wealth in 2009. The findings
are presented by income quintile under three scenarios: house prices
remain at November 2008 levels-the latest data available-, house prices
fall by 5 percent from November levels, or house prices fall by 15
percent. In all three scenarios, the vast majority of these families
will lose a substantial portion of their net wealth in 2009.

The report
projects that in 2009, the median household in the 45 to 54 age cohort
saw its net worth drop by more than 45 percent since 2004, to just over
$80,000 (including home equity). For early baby boomers, those between
the ages of 55 and 64, the losses were not quite as steep but still
came to 38 percent of net wealth, with the median wealth falling to
$140,000, approximately 80 percent of the price of the median home.
Nearly 30 percent of late baby boomers will need to bring cash to a
closing to cover their outstanding mortgage and transactions costs.

This analysis
should reaffirm the need to protect programs such as Social Security
and Medicare. Baker commented, "now that tens of millions of families
have just seen much of their wealth disappear, it is especially
important to pursue policies that ensure retirement security for those
on the brink of retirement."

In analyzing wealth holdings for these families, the authors used data
from the Federal Reserve Board's 2004 Survey of Consumer Finance. The
authors also used the S&P 500 and the Case-Shiller 20-city
Composite Index to adjust for equity values and home price changes
between 2004 and 2009.

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The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.

Further

To those who consider Trump a reptilian shape-shifter, mazel tov: Now he officially is one. Thanks to a species-naming auction for Rainforest Trust, a small, blind, worm-like, newly discovered amphibian who buries its head in the ground will be named Dermophis donaldtrumpi. The name, says its creator, is "perfect" for the new caecilian, from the Latin for "blind...perfectly mirroring the strategic vision (Trump) has consistently shown towards climate change.”

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